According to insurance and securities professionals in Law360, recent actions by the U.S. Securities and Exchange Commission—both proposed and enacted—are reshaping public company oversight and pushing directors’ and officers’ liability risks into uncharted territory. Haynes Boone Insurance Recovery Partner Carrie DiCanio spoke with the publication about how these actions could affect insurers and policyholders.
Read an excerpt below:
Carrie DiCanio of Haynes Boone's insurance recovery practice said that while arbitration costs could run high for the company, the contingency fee basis that many plaintiffs attorneys operate under does not lend itself to the structure of arbitration.
"Overall, arbitration benefits the policyholder here in terms of lowering the risk of securities litigation," she said. "The downside, the increased costs, does not outweigh the benefits to a company policyholder." …
Dicanio of Haynes Boone said that both the arbitration provision and the potential shift toward biannual reporting highlighted the SEC broad deregulatory shift, which was resulting in fewer government investigations that are not always covered by D&O policies.
However, less frequent reporting periods may translate to fewer resources devoted to internal oversight, which could mean each report carries more potential errors, she told Law360.
"This puts the onus on a company to decide where they're going to invest their resources," said DiCanio. "Certainly, if I were an insurer, I would want to see the same diligence being put towards the reporting requirements, no matter if it's quarterly or biannual."
Read the full Law360 article here.